Chapter 6 Review Questions

<body topmargin=0 leftmargin=0 marginheight=0 marginwidth=0> <table cellpadding=0 cellspacing=0 border=0><tr> <td valign="top" colspan=2 height=90 BGCOLOR="#006699" TEXT="#080000" bgproperties="fixed" background="122285a1erlcgo.gif"> <div> <FONT SIZE="5" COLOR="#FFCC66" FACE="Arial" ><B>Florida Agent Ethics</B></FONT><B>     |     </B><A HREF="index.htm" TARGET="_top" TITLE="Florida Agent Ethics"><U><B>home</B></U></A><B>       </B><A HREF="id15.htm" TARGET="_top" TITLE="TABLE OF CONTENTS"><U>TABLE OF CONTENTS</U></A>   |   <A HREF="id55.htm" TARGET="_top" TITLE="FINAL EXAMINATION"><U>FINAL EXAMINATION</U></A></div> <div>   <FONT SIZE="3" COLOR="#FFFFCC" FACE="Arial" ><A HREF="id4.htm" TARGET="_top" TITLE="Chapter 6 "><U><B>Chapter 6 </B></U></A><B>  </B></FONT><FONT SIZE="2" COLOR="#FFFFCC" FACE="Arial" ><B>         </B></FONT><B>                           </B><A HREF="id3.htm" TARGET="_top" TITLE="Chapter 1"><U>Chapter 1</U></A>   |   <A HREF="id66.htm" TARGET="_top" TITLE="Chapter 2 "><U>Chapter 2  </U></A>   |   <A HREF="id2.htm" TARGET="_top" TITLE="Chapter 3 "><U>Chapter 3  </U></A>   |   <A HREF="id5.htm" TARGET="_top" TITLE="Chapter 4 "><U>Chapter 4 </U></A>   |   <A HREF="id6.htm" TARGET="_top" TITLE="Chapter 5 "><U>Chapter 5 </U></A>   |   <A HREF="id4.htm" TARGET="_top" TITLE="Chapter 6 "><U>Chapter 6 </U></A>   |   <A HREF="id51.htm" TARGET="_top" TITLE="Code of Ethics"><U>Code of Ethics</U></A></div> <div> </div> </td> </tr><tr> <td valign="top" width=210 BGCOLOR="#FFCC66" TEXT="#080000" background="121d2c00dkelyh.gif"> <div> <A HREF="mailto:instructor@wallstreetinstructors.com" TARGET="_top" TITLE="mailto:instructor@wallstreetinstructors."><U><IMG SRC="12caf630.gif" border=0 width="175" height="99" ALIGN="BOTTOM" HSPACE="0" VSPACE="0"></U></A></div> <bR> <div> <A HREF="id38.htm" TARGET="_top" TITLE="Fiduciary Responsibility"><U>Fiduciary Responsibility</U></A></div> <div> <A HREF="id40.htm" TARGET="_top" TITLE="Replacement, Twisting and Churning"><U>Replacement, Twisting and Churning</U></A></div> <div> <A HREF="id39.htm" TARGET="_top" TITLE="Rebating Gifts"><U>Rebating & Gifts</U></A></div> <div> <A HREF="id41.htm" TARGET="_top" TITLE="Client Expectations"><U>Client Expectations</U></A></div> <div> <A HREF="id42.htm" TARGET="_top" TITLE="Misleading Terms"><U>Misleading Terms</U></A></div> <div> <B>Chapter 6 Review Questions</B></div> <bR> </td> <td valign="top" height=390 BGCOLOR="#FFFFFF" TEXT="#080000"> <div> <B>Chapter 6 Review Questions</B></div> <bR> <bR> <div> <A HREF="id40_replacement_ethics.htm" TARGET="_top" TITLE="Replacement, Twisting and Churning"><U>Which of the following is the least unethical practice?</U></A></div> <bR> <div> Churning</div> <div> Rebating</div> <div> Misrepresentation</div> <div> <B>Replacement</B></div> <bR> <div>  </div> <div> <A HREF="id40_churning__2_.htm" TARGET="_top" TITLE="Replacement, Twisting and Churning"><U>The practice of excessive trading in a client’s securities account for the primary purpose of generating commissions is known as</U></A><A HREF="id40_churning__2_.htm" TARGET="_top" TITLE="Replacement, Twisting and Churning"><U>:</U></A></div> <bR> <div> <B>churning</B></div> <div> rebating</div> <div> misrepresentation</div> <div> boiler-rooming</div> <bR> <bR> <div> <A HREF="id39_rebates.htm" TARGET="_top" TITLE="Rebating Gifts"><U>Jim Whelan promised his golf partner that he would pay the fees for the next round of golf if his partner would buy a life insurance policy.  Realizing he needed life insurance anyway, his partner bought a policy.  What, if any, ethical issues are involved?</U></A></div> <bR> <div> <B>Jim is guilty of rebating, which is both unethical and illegal</B></div> <div> Jim is guilty of rebating only if he actually paid the golf fees</div> <div> Since the partner needed life insurance anyway, no ethical or legal issue is involved</div> <div> Jim would be guilty of rebating only if the golf fees exceeded $100</div> <bR> <bR> <div> <A HREF="id42_misrep___oral_written.htm" TARGET="_top" TITLE="Misleading Terms"><U>For misrepresentation to be unethical, it must be: </U></A></div> <bR> <div> oral</div> <div> written</div> <div> <B>either a or b</B></div> <div> neither a nor b</div> <bR> <bR> <div> <A HREF="id40.htm" TARGET="_top" TITLE="Replacement, Twisting and Churning"><U>Which of the following would NOT be a possible result of a life insurance replacement?</U></A></div> <bR> <div> Suicide and incontestable provisions begin anew</div> <div> Original policy’s cost basis could be lost</div> <div> <B>Death benefit proceeds would become income taxable</B></div> <div> Any gain might need to be immediately recognized</div> <bR> <bR> <bR> <div> <TABLE BORDER="2" CELLPADDING="1" CELLSPACING="1" WIDTH="97" BORDERCOLORLIGHT="#C0C0C0" BORDERCOLORDARK="#808080" FRAME="BOX" RULES="ALL" ALIGN="BOTTOM" HSPACE="0" VSPACE="0" BGCOLOR=#FFCC66 > <tR> <tD VALIGN=CENTER HEIGHT= 38 WIDTH="87"><div> <A HREF="id55.htm" TARGET="_top" 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